DeFi app Solend votes to take over whale account to avoid liquidation

DeFi app Solend votes to take over whale account to avoid liquidation

Decentralized finance (DeFi) platforms are planning to go to maximum lengths to restrict the consequence of a cryptocurrency sell-off. One such platform is Solend that has recently tried to get control over its largest account, called “whale” investor, that could substantially influence the movements in the market.

The users of Solend have, however, voted for blocking the move.

Solend, a DeFi app that allows users to lend and borrow funds without visiting via intermediaries, said that a single whale is placed on an enormously large margin position, probably putting the protocol and its users at risk.

In the worst scenario, Solend is expected to be ended with bad debt, said the firm. This could lead to chaos, putting a strain on the Solana network.

The concerned account has reportedly placed 5.7-million tokens of a sol into Solend, accounting for more than 95% of deposits. It was deriving $108 million against that in the stablecoins USDC and ether.

Sources indicate that in case the price of sol fall below $22.30, around $21 million, i.e. 20% of the account’s collateral, will be at risk of liquidating, Recently, the trading price of Sol was $34.49.

Notably, a proposal was passed by Solend, offering it emergency powers to acquire the whale account, an unexpected move in the DeFi world.

According to Solend, this measure will empower the platform to liquidate the whale’s asset through “over-the-counter” transactions — as diverged to on-exchanges trades — to avoid a possible fall of liquidations.

The move received a massive backfire on Twitter, with some users questioning Solend’s decentralization. One of the core tenets of Defi is that it is meant to do away with centralized institutions like banks.

However, Solend’s users were requested to vote on a new proposal to upend the earlier vote. Following which the community voted in favor of the new proposal with 99.8% voting “yes.”

Source Credit - https://www.cnbc.com/2022/06/20/users-of-defi-app-solend-block-attempt-to-take-over-whale-account.html